52 Md. 173 | Md. | 1879
delivered the opinion of the Court.
By the will of James A. Sangston, who died in April, 1851, the testator appointed his brothers, George E. Sangston and Lawrence Sangston, his executors, and directed them to invest and hold all his estate in trust for the benefit of his two children, with certain limitations over in favor principally of his grandchildren. The executors took out letters of administration upon his estate, and thereby accepted the trusts created and imposed upon them by the will. Hanson and Wife vs. Worthington, 12 Md., 418. They then returned to the Orphans’ Court an inventory of the personal property, consisting chiefly of household furniture, appraised at $1622.85, and the inventory then states that: “ In addition to the above the deceased had an interest in the firm of Sangston & Co., not ascertained " At the time of the death of the testator, and since the 1st of August, 1843, the three brothers, James, George and Lawrence, were and had been partners in the commercial firm of Sangston & Co., which carried on the wholesale dry goods business in the City of Baltimore. All the estate of the testator seems to have consisted of the furniture above mentioned and his interest in the partnership property, real and personal, belonging to
1st. The question first in order, if not in importance, is, were the “ Partnership Articles,” under which the partnership between these three brothers was originally formed, in force at the death of James, in 1851 ? These Articles were signed on the 1st of August, 1843, and by their terms the co-partnership thus formed was to continue for the term of three years, unless sooner dissolved by mutual consent. At the expiration of this period, viz., on the 1st of August, 1846, the same three parties by an agreement in writing appended to the articles, agreed “to continue the aforegoing co-partner ship for two years from this date, subject to a charge of twelve per cent, of the net profits to Isaac J. Pollard, in lieu of the salary heretofore allowed him.” It is very plain that by this agreement the partnership under the Articles was expressly continued for two years. At the expiration of this period Pollard left, and the partnership was continued and the business conducted by the three brothers until the death of James, a period of nearly three years, without any further written agreement between them. This is not an unusual occurrence. It frequently happens that a partnership formed under Articles and limited as to time is silently continued after the expiration of the period originally prescribed for its duration, and the business is carried on by the same parties in much the same way with no new Articles and no formal renewal of the old ones. The question then arises under what terms does the law regard the continued partnership to be conducted P “ This question,” says Judge Story (Story on Partnership, sec. 219) “ does not perhaps admit of any uniform or universal answer. It may be affected by various considerations ; by
The complainants’ counsel has argued that the doctrine applies only in cases where one and the same firm has been continued by the same partners, and that here the intervention of Pollard in 1846 made a new firm, which was dissolved by his retirement in 1848, and that the firm thereafter continued was also in law a new firm. In other words the argument is, that the continuity of the original partnership was broken by a succession of new
Again, a clause in the will of James A. Sangston which was executed in December, 1849, is relied on to show that he did not then regard the Articles as in force. One of the conditions of the Articles is, that if either of the parties should die before the first of February or of August, the partnership should continue until the first days of those months respectively, as the case might be, when the business shall cease, and the survivors shall then have the privilege of taking the stock of goods then on hand at an appraisement to be made by duly sworn appraisers, and to continue the business on their own account. A provision like this for the continuance of the partnership after
2nd. On the 1st of August, 1851, the defendants, the surviving partners, formed a new co-partnership, under the same name of Sangston & Co., and continued in business for nearly three years when they failed. The proof, however, shows that they have paid all the partnership debts of the old firm, and the next question to be decided is, was the Circuit Court right in directing the account to be stated “from the books still extant”? By this we understand the Court as referring principally to the CashBook and Ledger D, which have been laid before us, and used in the argument. The first is a book of original entries, commencing in January, 1851, but the Ledger (which also contains entries .prior to April, 1851,) of course is not. of that character, and both of them contain entries relating to the settlement of the business of the old firm made after the death of James Sangston. But notwithstanding this, we are of opinion, from considerations pertaining exclusively to the circumstances of this case, there was no error in allowing these books to be used in stating the account, and we shall now state briefly, some of the principal reasons that have led us to this conclusion. It is averred by the ’defendants that all the other books relating to the business of the old firm prior to the death of the deceased partner, consisting of the usual books of an extensive mercantile house, were, after having been preserved for a long time, sold in 1865, by Lawrence Sangston as waste paper. This averment is supported as well as could be expected, without resort to the direct evidence on the subject of Lawrence Sangston himself, by the testimony of the witness Berger, who says he was at that time engaged in buying old books for paper manufacturers, and bought from Lawrence Sangston about one thousand pounds of such books, and made similar purchases from
While the books may be thus used,.it is of course open to the complainants to controvert any of the items therein. That has been successfully done, as to the charge of $6000 against James Sangston, made as of the 31st of August, 1854, and that item was very properly abandoned by tbe defendants, and does not appear in the auditor’s accounts. But we agree with the Court below, that it is sufficiently shown that the appraisement of the stock of goods on hand, on the first of August, 1851, was made in compliance with the provision of the partnership Articles on that subject, and we are also of opinion that the item of $23,483.40, credited to the old firm in the account between that firm and the new firm, found in Ledger D, represents the amount of such appraisement.
3rd. The next question is, were the defendants, as surviving partners, entitled to compensation for their services in winding up the concerns of the old partnership P That such compensation cannot be allowed, unless it be specially so stipulated, is familiar and elementary law. Story on Part., sec. 331. But in this case, the partnership Articles expressly provide that the surviving partners “ shall be allowed a reasonable compensation for closing the business, said compensation to be fixed by the Orphans’ Court, or by three disinterested persons.” By the terms “ closing the business,” we understand the parties to mean the settlement up of the partnership affairs, or in other words, the collection of its assets, and the application of them to
4th. The next question relates to the statement of the capital account and the rights and liabilities inter sese of the several partners, in respect to the capital advanced by each. We think it clear that this question must he settled by the terms and provisions of the partnership Articles. By those Articles it was agreed that James and George should bring in capital coming from a certain source to an amount not to exceed the sum of $30,000
5th. The amount appearing in the auditor’s schedules as having been advanced by the defendants out of their own means to pay the debts of the old firm, is derived from the account, found in Ledger D, between that firm and the new one. Some of the items of disbursements in the latter part of this account were made at so late a period after the dissolution of the old firm by the death of James
6th. In considering tbe case we have not relied upon the testimony of either of the defendants, and we are satisfied the objection to their competency as witnesses is well taken. It is sufficiently sustained by the decision in McKaig vs. Hebb, et al., 42 Md., 227.
We have thus disposed of the leading and most important questions in the case, and shall add but a word upon another point. It was alleged in argument that in the auditor’s schedules interest has in some cases been compounded. But it is answered that as this has been done on both sides no harm has resulted. All that we propose to say on this question is, that in the re-adjustment of the accounts to be hereafter made, no compounding of interest or calculation of it by rests should be made to the prejudice of either party.
It follows that the decree appealed from must be reversed, and the cause remanded for further proceedings in accordance with the views expressed in this opinion.
Decree reversed, and
cause remanded.